01/11/2017 BUSINESS UPDATES
New Compensation Requirements for Apprentices on State Public Works Jobs
Effective January 1, 2017, any contractor who requests the dispatch of an apprentice to work on a state public works project and requires the apprentice to undergo certain pre-employment activities will be required to compensate the apprentice at his/her applicable prevailing wage rate, not just for the time spent on that activity but also for the time spent traveling to/from the activity. Under AB 1926, which was signed into law by Governor Jerry Brown earlier this year, such compensable pre-employment activities include filling out an application, undergoing testing, training or examination, as well as other undefined "pre-employment processes."
This new law means that contractors who require an apprentice to come to their office for an interview or to fill out new-hire paperwork will be required to pay the apprentice at the applicable prevailing wage rate for the time spent traveling to/from the office as well as for the time spent interviewing and/or completing new hire forms, even if they opt not to hire the apprentice. Similarly, contractors who require an apprentice to undergo a pre-employment physical will be required to pay the apprentice for time spent traveling to/from the location where the physical will be administered and for the time spent undergoing the physical exam, even if the apprentice is not hired. The only exception to this new rule is for apprentices who fail a pre-employment drug or alcohol test. While apprentices who fail a drug/alcohol test do not have to be paid for their time spent traveling to/from the testing facility or being tested, they do have to be paid if they pass.
Questions have arisen as to whether apprentices have to be paid for time spent on phone interviews. Arguably, if the phone interview is very short - just a few minutes long - the time may not be considered compensable because it's "de minimis"; however, the longer the interview is, the more likely it may be that it's considered compensable time. Other contractors have asked whether time spent on pre-employment activities counts towards apprentice ratio requirements; this seems unlikely because the apprentice is not performing any duties which satisfy an apprenticeship program's work process requirements. It's also unclear whether this time should be reported on a contractor's certified payroll reports, particularly if the apprentice is not hired and never reports to work for the contractor on the public works project. In any event, contractors who require apprentices to engage in such activities and then dispatch the apprentice to a public works project the same day should count the time spent on the pre-employment activities towards the apprentice's daily overtime requirements. Compensation paid for such activities is very likely a taxable wage, so contractors should have the apprentice complete an IRS W-4 form for tax purposes at the onset.
President Obama Signs Prohibition on Form Contract “Non-Disparagement Clauses”
On December 14, 2016, President Obama signed the Consumer Review Fairness Act of 2016. This Act voids “non-disparagement clauses” in form contracts that are designed to prevent individuals from posting genuine negative reviews or comments of goods and services on line. There is a 90-day grace period, so the Act takes effect on March 14, 2017.
Blanket prohibitions in form contracts that prevent individuals from leaving genuine negative reviews will violate the Act, although the Act does not affect a legal duty of confidentiality. Specifically, the following types of clauses will violate the Act: 1) prohibitions against or restrictions on an individual’s ability to leave a genuine negative review; 2) penalties or fees against an individual for leaving a genuine negative review; and 3) clauses that transfer intellectual property rights in review or feedback content.
Companies can still bring civil causes of action for defamation, libel, slander, or any other similar cause of action. Also, websites are still able to remove, or refuse to publicly display, content that is harassing, abusive, obscene, vulgar, or otherwise inappropriate. Finally, the Act does not apply to contracts that have terms the parties were able to meaningfully negotiate.
The Federal Trade Commission will enforce the Act in the same way it enforces violations of unfair or deceptive trade practices. State Attorneys General may also enforce the Act by bringing a civil action on behalf of residents of the State. Enforcement will begin on December 14, 2017.
California Ranked No. 2 ‘Judicial Hellhole’ in Nation
California has once again been identified as one of the nation’s top “Judicial Hellholes,” according to the latest ranking of the “most unfair” civil litigation courts by the American Tort Reform Foundation (ATRF).
Trailing only “Judicial Hellhole” leader The Circuit Court for the City of St. Louis, California drops to the No. 2 ranking after previously topping the “Judicial Hellhole” list in 2012, 2013 and 2015.
Specific California cities and counties have regularly been cited for their civil justice system imbalances by the Judicial Hellholes report since its inaugural edition in 2002.
The report cites the latest data available from the Court Statistics Project of the National Center for State Courts, showing that more than a million new lawsuits are being filed annually in California’s state courts alone. Tens of thousands more are filed in federal courts here.
According to the report, California is the epicenter for lawyers trolling to bring disability access lawsuits against small businesses and class action lawsuits against food and beverage companies.
Sitting Down on the Job
California’s high court in April 2016 unanimously ruled that state law entitles employees to sit in a chair at work on a task-by-task and location-by-location basis. Employers found in violation are liable for civil penalties to each employee for each separate instance.
Becoming law as a voter-passed referendum in 1986, Proposition 65 requires businesses to post warning signs where even trace amounts of some 800 chemicals may be present. The signs have been an invitation for personal injury lawyers to bring numerous lawsuits, with Proposition 65 claims producing hundreds of settlements each year.
A December 2016 decision by the California Supreme Court found that “the duty of employers and premises owners to exercise ordinary care in their use of asbestos includes preventing exposure to asbestos carried by the bodies and clothing of on-site worker” where it is “reasonably foreseeable” that workers “will act as vectors carrying asbestos from the premises to household members.”
Despite different appellate courts disagreeing, the Supreme Court embraced such liability for this so-called “take home” asbestos exposure.
ADA lawsuits in California continue to surge. Brought under both the federal Americans with Disabilities Act (ADA) and state civil rights law allowing for damages and attorney fees, these claims are especially damaging for small business owners— particularly minorities and recent immigrants who are unable or unwilling to fight back.
Plaintiffs rarely seek renovations and actual access to an allegedly ADA-noncompliant restaurant, convenience store, nail salon or auto garage. “They just want to get paid and are happy to settle out of court,” the Judicial Hellholes report comments, regardless of whether the ramp’s angle is adjusted by a few degrees or the men’s room sink is ever lowered by an inch-and-a-half.
California lawmakers took a step toward curing California’s ADA lawsuit ills when Governor Edmund G. Brown Jr. signed SB 269 (Roth; D-Riverside) into law in May 2016. The bill allows small businesses time to cure certain technical violations without penalty.
Unsurprisingly, California’s Private Attorneys General Act (PAGA) generates many lawsuits. PAGA authorizes aggrieved employees to file lawsuits seeking civil penalties on behalf of themselves, other employees, and the state of California.
Based on the pretense that employees are bringing these claims on behalf of the state, 75% of the penalties from noncompliant employers goes to the state’s Labor and Workforce Development Agency while only 25% goes to “aggrieved employees.”
Many PAGA lawsuits stem from “technical nitpicks,” the report states, such as an employer’s failure to list on an employee’s pay stub the inclusive dates of the pay period, or an employer’s failure to print its address on the employee’s pay stub, even though the address is printed on the paycheck itself.
On-Call Rest Periods Are Not Allowed, California Supreme Court Rules
In a disappointing decision for California businesses, the California Supreme Court ruled recently that on-call rest periods are not permissible. This decision will require many California employers to re-examine their rest-break policies and practices.
Supreme Court Ruling
In Augustus, et al. v. ABM Security Services, Inc, the California Supreme Court reversed the 2nd District Court of Appeal, concluding that, “state law prohibits on-duty and on-call rest periods. During required rest periods, employers must relieve their employees of all duties and relinquish any control over how employees spend their break time.” The 10-minute rest break must be uninterrupted. “The rest period, in short, must be a period of rest.”
Although rest breaks are compensable time (unlike meal breaks), the employer must still relinquish control over the rest break, said the Court. An employer cannot meet its rest-period obligations by requiring employees to remain on-call. A “broad and intrusive degree of control” exists when there is an on-call rest period because the employee is forced to remain “on call, vigilant, and at the ready.”
The Court noted that its ruling does not prevent employers from being able to reasonably reschedule a rest period when the need arises — although such circumstances should be “the exception rather than the rule.” Moreover, if a rest period is interrupted, an employer can provide another rest period to replace the interrupted one or pay the premium pay for the missed rest break.
In November, Golden State voters overwhelmingly approved Proposition 64, which legalizes the recreational use of small amounts of marijuana. The California Marijuana Legalization Initiative permits residents to grow up to six plants for personal use and allows people over age 21 to possess up to one ounce of marijuana. (Voters in 2009 approved the legalization of medical marijuana.)
The possession and use of marijuana became legal Nov. 9, when the ballot measure passed. Sales, however, are barred until at least Jan. 1, 2018. Smoking in public or in a vehicle, even if the user is a passenger, is forbidden.
HR professionals should review their employee handbooks and policies to make sure the language covers the use of recreational marijuana, said Michael Kalt, a partner at Wilson Turner Kosmo in San Diego and the government affairs director for the California State Council of the Society for Human Resource Management. Companies can also issue what Kalt calls a "statement of reaffirmation," reminding workers that although California has legalized marijuana possession and use, neither is permitted on the job or on company property.
Kalt said he doesn't envision a surge in use-related problems at work but advised companies to consider how they'll handle post-accident testing for marijuana use. If, shortly after an accident, an employee tests positive for alcohol, it's likely he was under its influence. But because traces of marijuana can linger in the body far longer, there's greater potential for false positives, he said.